Bloomberg

(Bloomberg) -- Deutsche Lufthansa AG may cut as many as 2,400 jobs across its catering operations in Europe and reduce the number of sites to seven from 23 in an effort to turn the operations around.

Production in the home market of Germany is not profitable, and the company is weighing whether to eliminate 1,700 of the 5,500 full-time positions in the country, spokeswoman Josefine Corsten said by telephone, confirming a report in Frankfurter Allgemeine Zeitung. The number represents a maximum of possible cuts and may be implemented by 2021, with a large number of the employees affected scheduled to retire by then, she said. The proposal is preliminary and a decision may be made in the second half of next year.

Caterers are under pressure as airlines cut back on free food and beverages offered on board as ticket prices fall, and low-cost carriers that usually offer fewer such perks grow faster than network airlines. China’s HNA Group Co. in April agreed to buy Swiss airline catering company Gategroup Holding AG for 1.4 billion francs ($1.5 billion), and is in talks with Air France to acquire just under half of the carrier’s Servair catering unit.

Lufthansa will open a facility in the Czech Republic to test production there, Corsten said, which someday may take over much of the work done elsewhere. Decisions to close facilities in the Dresden and Bremen and a dish-washing unit in Frankfurt have already been taken, affecting about 140 employees, she said.

Lufthansa says its catering unit in the largest in the word, producing 1.6 million meals a day. Lufthansa shares fell 1.3 percent in Frankfurt. Shares of DO & CO AG, an Austrian airline caterer, declined 2.8 percent to close at the lowest level in almost 4 months.

To contact the reporter on this story: Richard Weiss in Frankfurt at rweiss5@bloomberg.net. To contact the editors responsible for this story: Chris Reiter at creiter2@bloomberg.net, Bruce Rule, Tony Robinson

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